Question

Listed below are costs found in various organizations. Required: For each cost item, indicate whether it would be variable or fixed with respect to the number of units produced and sold; and then whether it would be a selling cost, an administrative cost, or a manufacturing cost. If it is a manufacturing cost, indicate whether it is a direct cost or an indirect cost with respect to units of product. Manufacturing (Product) Cost Cost Item Variable or Fixed Se Administrative Cost Direct Indirect Ex. Direct labor Variable Yes Fixed Yes Fixed Yes Executive salaries Factory rent Property taxes, factory. Boxes used for packaging detergent produced by the company. 3. Salespersons' commissions. 4. Supervisor's salary, factory. 5. Depreciation, executive autos. 6. Wages of workers assembling computers. 7. Insurance, finished goods warehouses. 8. Lubricants for production equipment.

Answer 1

	Cost item					Variable	Selling	Administrative	Direct	Indirect
						Fixed	cost	cost
	Direct labor					Variable			yes
	Executive salaries					Fixed		yes
	Factory rent					Fixed				yes
1	Property taxes,factory					Fixed				yes
2	Boxes used for packaging detergent produced by company					Variable			yes
3	Sales persons commission					Variable	yes
4	supervisors salary,factory					Fixed				yes
5	Depreciation ,executive autos					Fixed		yes
6	Wages of workers assembling computers					Variable			yes
7	Insurance,finished goods warehouses					Fixed	yes
8	lubricants for production equipment					Variable				yes
9	Advertising costs					Fixed	yes
10	Microchips used in producing calculators					Variable			yes
11	Shipping cost on merchandise sold					Variable	yes
12	Magazine subscriptions ,factory lunchroom					Fixed				yes
13	Thread in garment factory					Variable				yes
14	Executive life insurance					Fixed		yes
15	Ink used in textbook production					Variable				yes
16	Fringe benefits ,material handling workers					Variable			yes
17	Yarn used in sweater production					Variable			yes
18	Wages of receptionist ,executive offices					Fixed		yes